Manufacturing Cost Accounting & Finance worked example

Rework Accounting Cost at 99% share of units expected to clear rework: a worked example

This scenario runs the rework accounting cost calculation on the strong side: 99% share of units expected to clear rework, with every other input held at its documented default. Use it to book the period rework variance and weigh rework against outright scrapping.

The inputs for this scenario

  • Units routed for rework: 600 units (unchanged)
  • Rework labor and material cost per unit: 9.5 $ / unit (unchanged)
  • Share of units expected to clear rework: 99 % (raised for this scenario; the documented default is 90)
  • Setup, teardown and re-inspection charge: 450 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Rework cost = reworked units x rework cost per unit x completion rate% + setup charge) to the inputs above produces each figure below.
  • At this operating point the engine returns 6,093 $ for total rework accounting cost, the number this scenario is built around.
  • At this operating point the engine returns 10.15 $ / piece for rework accounting cost per unit.
  • At this operating point the engine returns 5,643 $ for variable rework accounting cost.
  • At this operating point the engine returns 450 $ for fixed rework accounting cost adder.

How this compares with the baseline

  • Against the tool's baseline example, where share of units expected to clear rework sits at 90% and the headline result is 5,580 $, this scenario comes in 9.19% above the baseline at 6,093 $.
  • Use it when disposition-ing a quality hold, comparing rework versus scrap-and-remake, or building a cost-of-poor-quality report for a defect family. Treat this as a target state: the delta against the baseline quantifies what the improvement is worth before you commit to chasing it.

Results at a glance

  • Total rework accounting cost: 6,093 $ (headline result)
  • Rework accounting cost per unit: 10.15 $ / piece
  • Variable rework accounting cost: 5,643 $
  • Fixed rework accounting cost adder: 450 $

Run it with your numbers

  • Every input above is editable in the live Rework Accounting Cost calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.